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 Growing numbers of people in Eastern European states, from Hungary
and Poland to Romania, are turning to private health. The shift is
being driven by rising wages, coupled with low public health
spending which has often led to staff shortages and long waiting
times for tests and surgery.
Now big insurance players in the region, including PZU, Generali,
Vienna Insurance Group (VIG) and Allianz, are looking to gather and
analyze patient data from the fast-growing market to improve risk
assessments and pricing.
"Data is the foundation of the future," said Gabriella Almassy,
general manager of VIG's Hungarian division, adding that data would
be key to identifying where profits can me made in the region's
increasingly competitive health insurance market.
To that end, many insurers are teaming up with technology companies
such as Polish startup Infermedica, whose software analyzes
anonymized health information to provide preliminary diagnoses.
"We are seeing a health data boom that resembles the financial data
boom from 10-15 years ago when the banking sector changed a lot,"
said Maciej Malenda, head of partnerships at Infermedica, which
works with PZU and Allianz.
"Calling it a gold rush is perfectly accurate."
PZU, the region's biggest insurer, said it was also looking into
dozens of other startups to help it expand its health business.
Health data is an increasingly coveted prize for insurers and
technology companies globally.
The trend was illustrated by Google's plans to buy fitness-tracker
maker Fitbit for $2.1 billion, announced late last year. The deal
will bring the web giant a rich trove of data gathered by millions
of Fitbit devices, which monitor users' daily steps, calories
burned, heart rate and sleep quality, among other things.
Fitbit has already partnered with insurers, and analysts say much of
its value may now lie in its health data.
RISKY BUSINESS: DOLPHIN VS WHALE
The fledgling nature of the Eastern European private healthcare
market presents rare opportunities, due to low market saturation
compared with more mature Western markets, combined with rising
consumer spending power - however it also poses the biggest
obstacles for insurers.
Executives say a scarcity of data can make it difficult, or unwise,
to identify trends and complicates the pricing of risk. They stress
that it could take several years before investments in data
collection and analysis pay off, although they declined to disclose
spending figures, citing commercial sensitivity.
Attila Hevesi, a product development manager at Generali's Hungarian
division, said there was no comparison between the quantity and
quality of data available for health insurance and, for example, car
insurance.
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"The two are not on the same page," he said. "It is like a dolphin
versus a blue whale. But maybe even a dolphin is an exaggeration."
In an illustration of the thinking of big insurers, Hevesi said
Generali had struck a big health insurance deal with a large
employer which could end up being loss-making, but it was willing to
take the risk to build up its trove of patient data in the emerging
Hungarian market.
He declined to give details about that deal, but said Generali was
incrementally improving its pricing in Hungary as a result of
data-gathering.
VIG's Czech division also said access to reliable health data was a
problem.
"Today, we are pricing based on clients' data used for life
insurance," said Kooperativa board member Filip Kral.
DATA PROTECTION PERILS
Another major challenge facing the nascent regional market is
ensuring data privacy and security.
Companies handling personal data are required to protect
confidentiality and need to put appropriate security measures in
place to comply with stringent EU data protection rules.
However the risks of handling sensitive health information were
illustrated in October when Hungary's National Institute of Pharmacy
and Nutrition was hacked, with the data of thousands of patients
leaked from pharmacies and drug wholesalers.
Elsewhere in Europe, a British hospital trust was rapped by privacy
authorities two years ago for misusing data, after it passed on
personal information of around 1.6 million patients to AI firm
Google DeepMind.
Despite the potential pitfalls, however, many insurers looking to
carve out a niche in Central and Eastern Europe's health market have
little choice but to embrace data-gathering to improve pricing and
profitability.
VIG, for example, is planning to steer many Hungarian customers to a
self-service online platform this year, which would give the company
more granular data on how patients use private health services.
In the first nine months of 2019, VIG's health insurance premium
volumes rose to 513 million euros, with 62% of that coming from
Austria and the rest from Central and Eastern Europe - but the group
is banking on the latter to underpin its business in coming years,
according to spokesman Wolfgang Haas.
"This is where we see the greatest potential for the future."
(Additional reporting by Robert Muller in PRAGUE; Editing by Pravin
Char)
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